Oil exploration bid process kicked off in ‘conflict areas’

Published May 19, 2020, 10:00 PM By Myrna M. Velasco
https://business.mb.com.ph/2020/05/19/oil-exploration-bid-process-kicked-off-in-conflict-areas/

Invoking rightful ownership at the West Philippine Sea, the Department of Energy (DOE) indicated that it has already started processing applications and tenders for prospective exploration and development of oil and gas resources even for blocks straddling “conflict areas” in the basin.

Energy Secretary Alfonso G. Cusi admitted that initial resistance has been posed by China, because of its nine-dash lime claims at the disputed territory, but he said the Philippine government insists “that is ours,” hence, it has the legal authority over the blocks being offered under the petroleum contracting round.

The energy chief qualified though that the two countries continue to dialogue on how they can sort out an acceptable legal framework toward “joint exploration activities” in these diplomatically strained territories.

“For us at DOE, we want to proceed because the country needs it for energy security. The department is pushing it,” he said, while emphasizing that they continue to entice investors to look at the blocks on offer.

Once the Covid-linked modified enhanced community quarantine (MECQ) is relaxed, Cusi noted that the department will open bids for four nominated oil and gas blocks that had been previously set for 60-day challenge period.

The submission deadline for offers to Areas 5, 6, 7 and 8 have been scheduled May 5 and 8 this year, but given the extension of the lockdowns, Cusi stressed they will need to wait for the time when relevant parties could already physically attend a bid opening process at the department.

“We will open (the bids) as soon as the quarantine is lifted, or when movement restrictions are eased, and people can start working and the companies can attend,” he said.

The energy official admitted that of the three blocks (Areas 6, 7 and 8) in the West Philippine Sea, there are service areas within the disputed domain, but he has not specified which blocks are these. Area 5 is in Mindoro-Cuyo basin.

He specified that these are “nominated blocks” by interested parties, but he has not disclosed the identities of the investors at this point.

Nomination of a preferred block by an investor is one mode of investing in the country’s oil and gas sector, as underpinned by the Philippine Conventional Energy Contracting Program (PCECP) designed by the Duterte administration. The other is scheduled bidding for pre-determined areas (PDAs), which the DOE had undertaken last year.

For service area nomination, this could be done year-round, as long as the interested party will subject its nominated petroleum block to a 60-day challenge period as prescribed under the PCECP rules.